NEW YORK/LONDON, July 27 (Reuters) - Gold inched higher on Friday as the U.S. dollar slid lower after strong U.S. economic growth data while concern remains about trade tensions between the United States and Europe.

The dollar slipped against a basket of currencies as data showing the U.S. economy rang up its strongest quarter in nearly four years failed to erase worries that trade frictions would be a drag in the second half of 2018.

The greenback gave up initial gains after the U.S. government reported gross domestic product grew at a 4.1 percent annualized pace in the second quarter, matching the median forecast among economists polled by Reuters.

“The dollar weakened and treasury yields came off,” said Walter Pehowich, executive vice president of investment services at Dillon Gage. “Dollar weakness looks like it will continue and gold will see some short-term support.”

Benchmark 10-year U.S. Treasury yields slipped from their highest level in 1-1/2 months.

Spot gold edged up 0.1 percent to $1,223.46 an ounce 1:31 p.m. EDT (1731 GMT), having hit a one-week low of $1,216.93, and was on track for its third consecutive weekly decline, of about 0.5 percent.

U.S. gold futures for August delivery settled down $2.70, or 0.2 percent, at $1,223 per ounce.

In the physical markets, gold demand in India improved this week as domestic prices traded near a six-month low, while weaker rates in Singapore prompted a pick-up in demand there. Demand remained weak, however, in top consumer China as the yuan fell.

“We believe price action (in gold) is likely to be subdued in the coming weeks (as) physical demand is in the middle of a seasonally slow period, short interest in gold has risen as prices have fallen and there are 200 tonnes of loss-making ETF positions that could be liquidated,” Barclays said in a note.

Spot gold is expected to fall into a range of $1,206-$1,214 an ounce, Reuters technical analyst Wang Tao said.

“A key level of resistance will be $1,236, the double-bottom from a couple weeks ago,” Pehowich added.

Among other precious metals, silver rose 0.5 percent at $15.45 per ounce, but was heading for its seventh weekly decline. It earlier hit a one-week low at $15.29 an ounce.

Palladium dropped 0.9 percent at $918.70 per ounce, but was heading for its biggest weekly gain since the week of April 20, a nearly 3 percent rise.

Platinum rose 0.1 percent to $823.75 and was on track for a 0.3 percent weekly rise.

Additional reporting by Karen Rodrigues and Apeksha Nair in
Bengaluru
Editing by David Goodman, Adrian Croft and Will Dunham